Mail Stop 0306
March 22, 2005
Mr. Zackary S. Irani
President, Director and Chief Executive Officer
Biomerica, Inc.
1533 Monrovia Avenue
Newport Beach CA 92663
RE: Biomerica, Inc.
Form 10-KSB for the fiscal year ended May 31, 2004
File No. 0-8765
Dear Mr. Irani:
We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents. Where indicated, we think you should revise your
document
in future filings in response to these comments. If you disagree,
we
will consider your explanation as to why our comment is
inapplicable
or a revision is unnecessary. Please be as detailed as necessary
in
your explanation. In some of our comments, we may ask you to
provide
us with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-KSB for the period ending May 31, 2004
Management` Discussion and Analysis - Page 14
Results of Operations - Page 15
1. Here or in the notes to financial statements, please make
disclosure about the terms and conditions of the Lancer voting
agreements. We see that Lancer sold and/or issued additional
shares
during the periods. Clarify the affect, if any, of these
issuances
on your level of voting control over Lancer. Apply in future
filings.
2. We note that the Lancer segment increased their sales prices
for
domestic customers in November 2003, although the domestic sales
decreased. In future filings, please quantify the extent to which
changes in sales are attributable to increases/decreases in prices
or
to volume.
Liquidity, Capital Resources and Going Concern - Page 16
3. We see that Management believes that cash flows from operations
coupled with reduced costs and anticipated increased sales should
enable the company to fund operations for at least the next twelve
months. We note that sales increased only nominally with the
Biomerica segment actually experiencing a decrease in sales. In
future filings, please explain in greater detail why management
anticipates an increase in sales.
4. We see that you have quantified cash flows from operations, but
have not provided any analysis. As set forth in FR-72, we believe
that Registrants should normally present a discussion of cash
flows
from operating activities. That discussion should identify and
analyze the underlying drivers of operating cash flows, in
general,
and specific to the relevant periods presented. Please note that
the
form of the cash flow statement should not drive the substance of
this discussion and that it is insufficient to present a narrative
that merely lists items from that Statement. Please expand future
filings.
5. As a related matter, future filings should also identify and
describe reasons for significant changes in the components of
working
capital.
Item 8A, Controls and Procedures - Page 23
6. Please expand the first paragraph of the disclosure to
incorporate
language encompassing the entire two-sentence definition of
disclosure controls and procedures as set forth in Exchange Act
Rule
13a-15(e). That is, you should also clarify, if true, that your
disclosure controls and procedures are designed to ensure that
information required to be disclosed in reports filed or submitted
under the Exchange Act is accumulated and communicated to
management
to allow timely decisions regarding required disclosure. Apply in
future filings.
Consolidated Statements of Cash Flows - Page FS-11
7. Please revise future filings to present cash receipts and
payments
related to the item labeled "change in minority interests" in
gross
amounts. Please also use more descriptive titles. That is, what
is
the nature of the underlying cash payment in 2004 and the cash
receipt in 2003? If these amounts did not arise from cash
transactions, tell us how the presentation conforms to the
requirements of paragraph 32 to FAS 95.
Note 7 Shareholders` Equity - Page FS-27
8. With respect to options and warrants granted to non-employees,
please expand the notes to financial statements to disclose how
assigned fair values were determined, the model applied and the
underlying valuation assumptions. With respect to shares issued
for
services or other non-cash consideration, please expand to also
disclose how fair value was measured. Apply in future filings.
* * * *
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested supplemental
information. Detailed cover letters greatly facilitate our
review.
Please file your cover letter on EDGAR. Please understand that we
may have additional comments after reviewing your responses to our
comments.
You may contact Dennis Hult, Staff Accountant, at (202) 942-
2812 or myself if you have questions regarding comments on the
financial statements and related matters. Please contact me at
(202)
942-2862 with any other questions. In this regard, do not
hesitate
to contact Brian Cascio, Accounting Branch Chief, at (202) 942-
1791.
Sincerely,
Gary Todd
Reviewing Accountant
??
??
??
??
Zackary S. Irani
Biomerica, Inc.
March 22, 2005
Page 4